Valuable Consumers Demand Personalization

Online purchasers are more likely to spend at Web sites offering personalization, according to survey by Cyber Dialogue, but research by Cahners In-Stat found a low adoption of personlization technologies.

Frequent online purchasers are more likely to spend more money at Web sites that offer personalization, according to survey conducted by Cyber Dialogue and sponsored by the Personalization Consortium.

More than half (56 percent) of the respondents said they are more likely to purchase from a site that allows personalization, and 63 percent are more likely to register at a site that allows personalization or content customization. The implication for online sellers is that the most desirable customers increasingly want to receive improved service or relevant benefits from Web sites that can remember their personal information and subsequently tailor that information to their personal needs and interests.

"Online marketing has now entered a stage where personalization is the rule, not the exception," said Don Peppers of Peppers and Rogers Group, co-chair of the Personalization Consortium. "Savvy marketers will need to provide consumers the convenience of customization, show consumers its benefits, and earn the consumers' trust by carefully guarding all their personalized data."

Among the findings of the survey:

87 percent of people surveyed are annoyed when a site asks for the same information more than once

82 percent are willing to provide such personal information as gender, age and ethnicity if the site will remember their preferences and personal information.

28 percent of personalizers spent more than $2000 online last year; compared to only 17 percent of the nonpersonalizers who spent as much.

21 percent of personalizers pay for online subscriptions, versus only 11 percent of the nonpersonalizers.

82 percent of those surveyed say a Web site's privacy policy is a critical factor in their decision to purchase online

84 percent have refused to provide information at a Web site because they were not sure how that information would be used

Personalization of Web sites becomes an even stronger differentiator considering that the approximately 40 million adults who have been online for two years or more now customize their online experience in some fashion. In fact, the number of experienced adult Internet users who use personalization has doubled in the past two years, increasing from 23 percent to 47 percent of these online adults.

"Experienced Web consumers clearly value the relevance, convenience and improved service that personalization offers, and they are willing to supply personal information online in exchange for these benefits," said Mike Capizzi of Frequency Marketing, Inc., chairman of the Personalization Consortium's research committee. "They also place a high value on privacy and security, and their sustained loyalty to any business requires the business to clearly state and adhere to acceptable policies in both arenas."

Respondents to the survey were found most likely to provide the greatest amount of personal information in exchange for access to restricted areas of a Web site such as a members' only area and a secure environment.

These purchasers who took part in the survey were defined as United States consumers age 18 and over who have been online for two years or more and have made one or more purchases online during the last 12 months. The survey was based on the answers of 512 qualified respondents who were screened from a universe of 3,500 and weighted to reflect this group of online users.

"Personalization technologies offer a means for businesses to make online interactions more meaningful and effective," said Kirsten Cloninger, industry analyst with In-Stat's eBusiness Group. "However, businesses are still wary of infringing on consumers' privacy rights so adoption has been modest in the corporate market."

Firms are still focused primarily on customers for personalization, but are beginning to apply these technologies to employees as well. In-Stat forecasts that suppliers and partners will be future targets for these technologies primarily in the corporate market (100 or more employees), as businesses continue to leverage the Internet for supply chain management, collaboration and communication. However, personalizing interactions for suppliers and partners is not likely to happen, Cloninger said

In-Stat also surveyed small companies (1 to 99 employees) and found that, although many small company Web sites lack sophistication, even one-person businesses demonstrated an interest in ways to present consumers with more personalized online interactions.

"For smaller companies, the use of personalization technologies is still a thing of the future," Cloninger said. "Until these company's Web sites become more complex, only simple forms of personalization will make any sense for these firms." In-Stat also determined that online self-service continues to be a strong interest for small companies and a feasible way for them to augment the quality of online customer interactions.

Other findings from In-Stat include:

The number of corporate market businesses (100+ employees) that are planning to use personalization technology will almost double by 2002, up from 22 percent to 43 percent.

In the small companies market, 9 percent of small Internet-accessing companies reported that they currently use personalization technologies.

Almost two-thirds of middle market and 80 percent of enterprise respondents indicated that preference-based personalization was not an invasion of privacy when used for business reasons.

Customers constitute the number one online access priority for both the small companies and corporate markets, 58 percent and 56 percent respectively.